Making Westports a success

By Stephanie Jacob

After a request to deliver a proposal on the benefits of privatising Westports turned into an opportunity to build and operate it, G. Gnanalingam entered the third different sector of his career with a simple brief – to make it successful. Some 19 years later, Gnanalingam has fulfilled this brief turning Westports from a swampy island to a world class port.

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In the early nineties, Malaysia was losing millions of ringgit from Malaysian cargo being transhipped through Singapore — with almost 60% of all local cargo going through Singapore. In an effort to stem the flow the government had already fully privatised Northport by 1992, but the administration and in particular then prime minister Dr Mahathir Mohamad felt that there was much more potential to unlock.

So by 1994 the government was on the hunt for someone to take charge of a second port in Port Klang and G Gnanalingam who at that time was on the board of the Port Klang Authority (PKA) was approached to come up with a paper on the practicality of privatising and developing the second port.

Although Gnanalingam did have some experience from being on the PKA board, he readily admits that he was not the ‘go-to man’ when it came to ports. But he feels that this fact actually helped him, as he made himself a very good listener.

“We had no opinions, we listened… to APL and to Maersk (both are shipping lines). We went to Busan, we went Hong Kong and Kaohsiung ports and studied them. We also went many times to Singapore and we saw what they did… nobody could fault us on our enthusiasm,” he said.

When presenting his proposal to the cabinet Gnanalingam kept it simple and factual, presenting 25 reasons for the development of Westports and it was well received by the administration and he was given the green light to proceed.

Gnanalingam initial stake was around 10%, and he invested RM100 million, with the rest being spread out amongst four other investors including individuals and funds. Later as his initial partners sold off their portions, he acquired their shares to eventually become the majority shareholder at Westports.

In discussing the government’s decision to award him the concession, he admits that there were questions asked about his connections with members of the cabinet. Gnanalingam says that he was acutely aware that it was suggested that his ties with then transport minister Ling Liong Sik was the reason he got the sought after concession.

Both men attended the Royal Military College (RMC) in Negeri Sembilan and this link was highlighted as the basis for the accusations – however it is dismissed as being off the mark by Gnanalingam as their years at the school did not overlap.

Furthermore he says building and running the port was not something he particularly craved. Saying that he just “did a paper on how the privatisation should be done…if they had taken my paper and gone elsewhere, I would have thought fine. But when that paper was presented to the cabinet it was well received and I was told to go and start the privatisation.”

It is also important to highlight that privatisation exercises were approved not by the individual ministries, but rather by the Economic Planning Unit and therefore was not a decision that could have been taken without the approval of the cabinet and the prime minister.

In fact, Dr Mahathir’s vision was an important factor to the port’s success, because the premier saw the worth and importance of strong ports and realised the need to take advantage of Malaysian cargo being transported and not lose it to other ports – primarily Singapore’s.

Gnanalingam says that the prime minister would even come to Port Klang monthly to see the development of the port and would constantly keep track of its progress.

In an exclusive interview at Westports Headquarters, Gnanalingam also dismisses suggestions that it was Dr Mahathir’s son Mirzan Mahathir stake that was sold to Li Ka-shing’s Hutchison Whampoa in 2000, saying that the stake came from his holdings.

Nonetheless industry sources emphasise that Dr Mahathir was instrumental in securing the Hong Kong tycoon’s investment in the port, an investment that was timely to the port’s growth.

Issues of favour aside, it is the massive growth that sets Westports apart – as during that time neighbouring Northport was also growing but by a much smaller quantum. This speedy growth is also an interesting mirror to Gnanalingam’s belief that a port’s speed and efficiency is what makes the difference.

Gnanalingam realised that just because he and the government saw the potential in Westports; it did not mean that the shipping lines would. If these liners were to be attracted, the port would have to be marketed correctly to them, said Gnanalingam.

Marketing has always been Gnanalingam’s catch phrase, and looking across his career it is something he has always got right.

For him, going into such a different sector from the one he had been in was not daunting, because he believed that the nature of the business is not what is most important – it is how you sell it that counts.

With Westports, he realised that ships were in general spending too much time docked in the ports, saying “ships spend 65% of their time in the port…if I told you that on your next flight to London you would be spending the same amount of time in the airport – you would scream your head off. So anyone who could turn the ships around faster would make more money.”

Famous for calling for his staff to work as if they are part of a Formula One racing team, he pointed out that the time taken to change a tyre in an ordinary situation was significantly more than the time a Formula One pit crew took. The difference he said was that they were prepared and efficient in executing the task.

His Westports team responded to his call, and from early on in the ports operation began to push the traditional timeframe in which ships were offloaded when they docked at the port. In 2011, the employees hit an unofficial record when they moved 734 boxes, in one hour using nine cranes.

By reducing the time ships spent at the port, vessels docking at Westports were able to save tens of thousands of ringgit – and this made it an attractive option to the other regional ports.

But rather than take credit for this achievement, Gnanalingam says that it only worked because his people responded to his call and took responsibility for making it happen. For him, his success has been largely down to surrounding himself with the best and the brightest and then allowing them the freedom to contribute.

He offers an amusing anecdote to underline his point, telling the story of how the excitement and celebration of the first ship docking at Westports was almost derailed by the fact that the customs department at that time did not work around the clock.

“The ship was docking at 6PM, and we had invited the prime minister and the transport minister to be there, but we would not be able to off-load the ship because customs were not working 24 hours at the port at that time. After days of trying to find a solution, one of my girls simply suggested that we offload the ship but not move the goods out of the port, solving the problem!” he quipped.

Gnanalingam then asks, “Who built the Taj Mahal? You say Shah Jahan…but my mother told me when I was a boy that it was the workers who built the Taj Mahal,” adding that he believed that Westports’ story would not be the success it is without its employees.

A common line that may be, but Gnanalingam has a track record of putting measures into place to back up his talk about how he values his people. For example, he initiated a fund that would allow employees to take  non-collateral loans which allowed his employees to avoid going to loan sharks or pursuing similar less desirable forms securing funds.

His reasoning was simple a happy employee is a productive employee. That being said, he is also careful to emphasise that this was not a freebie, and emphasises that it was a loan that required guarantors and had to be paid back with interest – for him it was a practical measure.

Be that as it might, for his employees it was a safer and easier avenue for his employees to get financial assistance when they needed it, and one that surely would have cemented the admiration Gnanalingam’s employees have for him.

In 2013, Westports was listed on the main board of the Bursa Malaysia’s stock exchange with a market capitalisation of RM8.53 billion to be the largest company to list in 2013 at the point of its debut. The listing also made Gnanalingam a billionaire.

No new shares were issued for the listing, with existing shareholders selling portions of their stakes instead. Gnanalingam and his family reduced their stake from 60% to 46.8%, which netted them around RM1.15 billion (US$350 million).

Following the listing, the family’s stake in the company is valued at about RM3.9 billion according to the Bloomberg Billionaires Index.

Going forward Gnanalingam believes that there is more to come from Westports and after hitting a landmark 50 millionth twenty-foot equivalent units (TEUs) handled in 2013, the goal now is to achieve 100 million TEUs handled by 2020.

At 69 years of age, the obvious question is how involved he will be in reaching this goal, and while there is no clear answer or indication from the man himself, those closest to him say that his enthusiasm for the port and its future has not diminished.

As such although he has passed on the day to day running of the port to his son Ruben who is chief executive officer, one expects that health permitting Gnanalingam or Tan Sri G as he is fondly known by his team will be at Westports’ helm for awhile yet.

Yesterday: From tobacco to media. Gnanalingam’s early success.

Tomorrow: In conversation with G Gnanalingam.